Committee Addresses Abuses of Medicaid Eligibility

The House Subcommittee on Health Care, District of Columbia, Census and the National Archives conducted a hearing aimed at understanding and developing a strategy for combating abuses of Medicaid eligibility rules.

Chairman Trey Gowdy (SC-4) began the hearing by explaining that Medicaid is currently an unsustainable system due in part to beneficiaries gaming the system. The costs of Medicaid nationally have exploded from less than 75 billion dollars per year two decades ago to over 400 billion dollars per year, causing both state governments and the Federal Government to struggle financially. “Although Medicaid technically has income and asset tests, these tests are easy to circumvent and abuse,” explained Chairman Gowdy, “In fact, an entire cottage industry has arisen seeking to educate the wealthy on how to transfer assets so tax payers can pay for their long term care.”

According to panelists, wealthier individuals can artificially minimize their assets by taking advantage of a variety of exemptions. Home equity, for example, can be exempt from means testing up to a limit of $500,000 or $750,000, and assets held in one business, including capital and cash flow, can be exempt without any limit. Individuals also often transfer assets to children to qualify for benefits. Ms. Janice Eulau, Assistant Administrator of the Medicaid Services Division of the Suffolk County Department of Social Services, described the importance of more education as well as new laws in preventing abuses. She finds that most people do not understand what Medicare does not cover until they need a certain service and are denied by Medicare. “Wealthy seniors fail to realize the value or need for Long Term Care Insurance,” said Eulau. “Having a better understanding of the limits of Medicare would enable seniors to make timely and informed decisions regarding their future care needs.”